Discussion
Afternoon all.
I'm due to remortgage my home soon, and given that it's appreciated in value by £125K in 6 years I feel I'd be wise to use that to my advantage.
I've done a few sums, and what I think I'm going to do (subject to speaking to my mortgage advisor and a financial advisor) is release £70K equity from my home through the remortgage and up the term a couple of years which means my current mortgage costs me £200/month more than it does now - I was going to start overpaying this much from here on out before the BTL came to mind.
I'll then be looking to put the £70K down on a flat and borrow a further £100K on a BTL mortgage for a period of 25 years, making the payment around £390/month. Rental income on flats in the area seems around £750 pcm. So after tax etc. I don't imagine there'll be much profit in it, but I am considering this more a retirement investment and take advantage of the rising property prices in/around London.
I would probably get a 30yr term which would make for lower monthly payments, and more monthly profit as well - monthly mortgage payment here would be circa £330.
Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
I'm due to remortgage my home soon, and given that it's appreciated in value by £125K in 6 years I feel I'd be wise to use that to my advantage.
I've done a few sums, and what I think I'm going to do (subject to speaking to my mortgage advisor and a financial advisor) is release £70K equity from my home through the remortgage and up the term a couple of years which means my current mortgage costs me £200/month more than it does now - I was going to start overpaying this much from here on out before the BTL came to mind.
I'll then be looking to put the £70K down on a flat and borrow a further £100K on a BTL mortgage for a period of 25 years, making the payment around £390/month. Rental income on flats in the area seems around £750 pcm. So after tax etc. I don't imagine there'll be much profit in it, but I am considering this more a retirement investment and take advantage of the rising property prices in/around London.
I would probably get a 30yr term which would make for lower monthly payments, and more monthly profit as well - monthly mortgage payment here would be circa £330.
Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
Yes we do it and yes we use a management agent who takes their 10% but have always got us good tenants in record time zero missed payments and it's always returned spotless after each tenant which is worth 10% IMO.
Your figures sound like they stack up and you should return some profit each year.
Any questions just ask there are plenty of people on here who are landlords.
Your figures sound like they stack up and you should return some profit each year.
Any questions just ask there are plenty of people on here who are landlords.
Thanks for the reply.
Is your letting agent a large national agent or someone small and local?
As the BTL will be in mine and the mrs. names, how is tax paid on the profit? I understand that interest may be deducted from the overall taxable amount, and so then how is the remaining portion taxed, I am a higher rate tax-payer and my wife isn't, so is the profit divided between the 2 of us and taxed accordingly ?
Which is my next question, do you pay an accountant to manage this for you, or do you do a self-assessment?
Is your letting agent a large national agent or someone small and local?
As the BTL will be in mine and the mrs. names, how is tax paid on the profit? I understand that interest may be deducted from the overall taxable amount, and so then how is the remaining portion taxed, I am a higher rate tax-payer and my wife isn't, so is the profit divided between the 2 of us and taxed accordingly ?
Which is my next question, do you pay an accountant to manage this for you, or do you do a self-assessment?
Going forward, you won't be able to offset interest against tax.
I wouldn't pay an accountant, there isn't much to account for, in your self-assessment just enter the income and any expenses you incurred fixing things.
PS rather than an estate agent, you could also use a self-listing service like upad.
I wouldn't pay an accountant, there isn't much to account for, in your self-assessment just enter the income and any expenses you incurred fixing things.
PS rather than an estate agent, you could also use a self-listing service like upad.
Edited by montecristo on Monday 17th July 18:26
rossw46 said:
Afternoon all.
Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
Nope I do something in btl that is the diametric opposite of your plan.Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
This fell on my lap today. Would I like it prior to the room? Told the guy from the auction house to clarify a couple of points and if he does it's MINE!! MINE I TELL YA!!
http://www.rightmove.co.uk/property-for-sale/prope...
And forget about £22k. When everyone's had a kick at ma baws £27k will have fled my bank ac.
And I will bank £330 a month from it. With very few breaks. Till I am dead.
And trust me, if I could think of another way to make a passive 10%+pa for my money I wouldn't go near it.
Managed? Yes. Fully. By a firm operated by an eccentric whose control of tenancies and their administration makes Saddam Hussein's previous grip on Iraq look like liberalism.
Tips? Think very hard before inviting a parasite to take a demanding sleeping partnership in your enterprise.
drainbrain said:
Nope I do something in btl that is the diametric opposite of your plan.
This fell on my lap today. Would I like it prior to the room? Told the guy from the auction house to clarify a couple of points and if he does it's MINE!! MINE I TELL YA!!
http://www.rightmove.co.uk/property-for-sale/prope...
And forget about £22k. When everyone's had a kick at ma baws £27k will have fled my bank ac.
And I will bank £330 a month from it. With very few breaks. Till I am dead.
And trust me, if I could think of another way to make a passive 10%+pa for my money I wouldn't go near it.
Managed? Yes. Fully. By a firm operated by an eccentric whose control of tenancies and their administration makes Saddam Hussein's previous grip on Iraq look like liberalism.
Tips? Think very hard before inviting a parasite to take a demanding sleeping partnership in your enterprise.
Looks nice. Main bedroom needs a few coats of non black paint. This fell on my lap today. Would I like it prior to the room? Told the guy from the auction house to clarify a couple of points and if he does it's MINE!! MINE I TELL YA!!
http://www.rightmove.co.uk/property-for-sale/prope...
And forget about £22k. When everyone's had a kick at ma baws £27k will have fled my bank ac.
And I will bank £330 a month from it. With very few breaks. Till I am dead.
And trust me, if I could think of another way to make a passive 10%+pa for my money I wouldn't go near it.
Managed? Yes. Fully. By a firm operated by an eccentric whose control of tenancies and their administration makes Saddam Hussein's previous grip on Iraq look like liberalism.
Tips? Think very hard before inviting a parasite to take a demanding sleeping partnership in your enterprise.
rossw46 said:
So after tax etc. I don't imagine there'll be much profit in it, .
That is a lot of hassle, headache and expense for no profit. And you have to get yourself into more debt for the privilege. I would just pay your mortgage down and invest in funds that have historically returned 8-9%+
technodup said:
I'm always suspicious of why someone would sell a property that has tenants and is recovering a good return? I get it that some might be moving out of the game but I've seen a lot of low value properties similarly advertised.drainbrain said:
Nope I do something in btl that is the diametric opposite of your plan.
This fell on my lap today. Would I like it prior to the room? Told the guy from the auction house to clarify a couple of points and if he does it's MINE!! MINE I TELL YA!!
http://www.rightmove.co.uk/property-for-sale/prope...
And forget about £22k. When everyone's had a kick at ma baws £27k will have fled my bank ac.
And I will bank £330 a month from it. With very few breaks. Till I am dead.
And trust me, if I could think of another way to make a passive 10%+pa for my money I wouldn't go near it.
Managed? Yes. Fully. By a firm operated by an eccentric whose control of tenancies and their administration makes Saddam Hussein's previous grip on Iraq look like liberalism.
Tips? Think very hard before inviting a parasite to take a demanding sleeping partnership in your enterprise.
No idea what you're talking about. This fell on my lap today. Would I like it prior to the room? Told the guy from the auction house to clarify a couple of points and if he does it's MINE!! MINE I TELL YA!!
http://www.rightmove.co.uk/property-for-sale/prope...
And forget about £22k. When everyone's had a kick at ma baws £27k will have fled my bank ac.
And I will bank £330 a month from it. With very few breaks. Till I am dead.
And trust me, if I could think of another way to make a passive 10%+pa for my money I wouldn't go near it.
Managed? Yes. Fully. By a firm operated by an eccentric whose control of tenancies and their administration makes Saddam Hussein's previous grip on Iraq look like liberalism.
Tips? Think very hard before inviting a parasite to take a demanding sleeping partnership in your enterprise.
rossw46 said:
any tips / other considerations or advice.
Unless you're already maxxed out on pensions and ISA it's not a brilliant plan.- Poor tax treatment (Stamp Duty, restricted Income Tax deduction for interest payments, Capital Gains Tax on sale)
- Lack of diversification
- Gearing risk of borrowing to invest
drainbrain said:
rossw46 said:
Afternoon all.
Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
Nope I do something in btl that is the diametric opposite of your plan.Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
This fell on my lap today. Would I like it prior to the room? Told the guy from the auction house to clarify a couple of points and if he does it's MINE!! MINE I TELL YA!!
http://www.rightmove.co.uk/property-for-sale/prope...
And forget about £22k. When everyone's had a kick at ma baws £27k will have fled my bank ac.
And I will bank £330 a month from it. With very few breaks. Till I am dead.
And trust me, if I could think of another way to make a passive 10%+pa for my money I wouldn't go near it.
Managed? Yes. Fully. By a firm operated by an eccentric whose control of tenancies and their administration makes Saddam Hussein's previous grip on Iraq look like liberalism.
Tips? Think very hard before inviting a parasite to take a demanding sleeping partnership in your enterprise.
Oh well. No doubt there'll be another one along in a minute....
To the OP;
I suggest you discuss with your accountant how the new taxation rules will affect you, I suspect you will be earning zero from your investment and once you factor in voids and repairs you'll probably be running at a loss, you're therefore solely relying on capital growth
As mentioned above I'm not sure where you could buy in/around London for £170k.
Unless you're young enough to lock your money up for a considerable period I doubt that leveraged BTL works anymore in view of the upcoming tax changes.
I suggest you discuss with your accountant how the new taxation rules will affect you, I suspect you will be earning zero from your investment and once you factor in voids and repairs you'll probably be running at a loss, you're therefore solely relying on capital growth
As mentioned above I'm not sure where you could buy in/around London for £170k.
Unless you're young enough to lock your money up for a considerable period I doubt that leveraged BTL works anymore in view of the upcoming tax changes.
rossw46 said:
Afternoon all.
I'm due to remortgage my home soon, and given that it's appreciated in value by £125K in 6 years I feel I'd be wise to use that to my advantage.
I've done a few sums, and what I think I'm going to do (subject to speaking to my mortgage advisor and a financial advisor) is release £70K equity from my home through the remortgage and up the term a couple of years which means my current mortgage costs me £200/month more than it does now - I was going to start overpaying this much from here on out before the BTL came to mind.
I'll then be looking to put the £70K down on a flat and borrow a further £100K on a BTL mortgage for a period of 25 years, making the payment around £390/month. Rental income on flats in the area seems around £750 pcm. So after tax etc. I don't imagine there'll be much profit in it, but I am considering this more a retirement investment and take advantage of the rising property prices in/around London.
I would probably get a 30yr term which would make for lower monthly payments, and more monthly profit as well - monthly mortgage payment here would be circa £330.
Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
It's not really an 'investment' if you are entering into a business proposition that is guaranteed to lose money every month from month one, and just hopes that in 25 years time the underlying value has gone up enough to cover the opportunity cost, , set up costs, debt cost, professional fees, maintenance costs, risk/reward, tax costs and exit costs. Really, it's just a wild speculative punt on rates remaining near zero for the next 25 years when you know for a fact that they won't. I'm due to remortgage my home soon, and given that it's appreciated in value by £125K in 6 years I feel I'd be wise to use that to my advantage.
I've done a few sums, and what I think I'm going to do (subject to speaking to my mortgage advisor and a financial advisor) is release £70K equity from my home through the remortgage and up the term a couple of years which means my current mortgage costs me £200/month more than it does now - I was going to start overpaying this much from here on out before the BTL came to mind.
I'll then be looking to put the £70K down on a flat and borrow a further £100K on a BTL mortgage for a period of 25 years, making the payment around £390/month. Rental income on flats in the area seems around £750 pcm. So after tax etc. I don't imagine there'll be much profit in it, but I am considering this more a retirement investment and take advantage of the rising property prices in/around London.
I would probably get a 30yr term which would make for lower monthly payments, and more monthly profit as well - monthly mortgage payment here would be circa £330.
Do you do something similar, any tips / other considerations or advice. Is it better to use a letting agent or manage it yourself, your views are appreciated.
And that's before even considering the cost of that £70k seed capital which is also pure debt that has ultimately an unknown servicing cost, other than the cost becoming larger in the medium term but also having to consider the increase in LTV on your main home risking pushing up the entire cost of debt secured against it and even removing an absolutely essential capital safety buffer that may be required to prevent foreclosure further down the line.
The new investment property taxes combined with being at the bottom of a rising borrowing cost curve really does mean that the BTL market has finally become professional and each acquisition needs to be taken as a true investment taking into consideration the possible events of each year to term and not a speculative punt based on what the market might just look like in year 25. Each unit really needs to be very low, leverage, secure rental market and actually profitable year on year on its own merits with any future capital uplift being merely the icing on the cake and not the actual single investment criteria.
DonkeyApple said:
It's not really an 'investment' if you are entering into a business proposition that is guaranteed to lose money every month from month one, and just hopes that in 25 years time the underlying value has gone up enough to cover the opportunity cost, , set up costs, debt cost, professional fees, maintenance costs, risk/reward, tax costs and exit costs. Really, it's just a wild speculative punt on rates remaining near zero for the next 25 years when you know for a fact that they won't.
And that's before even considering the cost of that £70k seed capital which is also pure debt that has ultimately an unknown servicing cost, other than the cost becoming larger in the medium term but also having to consider the increase in LTV on your main home risking pushing up the entire cost of debt secured against it and even removing an absolutely essential capital safety buffer that may be required to prevent foreclosure further down the line.
The new investment property taxes combined with being at the bottom of a rising borrowing cost curve really does mean that the BTL market has finally become professional and each acquisition needs to be taken as a true investment taking into consideration the possible events of each year to term and not a speculative punt based on what the market might just look like in year 25. Each unit really needs to be very low, leverage, secure rental market and actually profitable year on year on its own merits with any future capital uplift being merely the icing on the cake and not the actual single investment criteria.
Property has been a safe bet so far and time will tell, but I think that is a really excellent post that sums up the current BTL market (as I view it from the outside). And that's before even considering the cost of that £70k seed capital which is also pure debt that has ultimately an unknown servicing cost, other than the cost becoming larger in the medium term but also having to consider the increase in LTV on your main home risking pushing up the entire cost of debt secured against it and even removing an absolutely essential capital safety buffer that may be required to prevent foreclosure further down the line.
The new investment property taxes combined with being at the bottom of a rising borrowing cost curve really does mean that the BTL market has finally become professional and each acquisition needs to be taken as a true investment taking into consideration the possible events of each year to term and not a speculative punt based on what the market might just look like in year 25. Each unit really needs to be very low, leverage, secure rental market and actually profitable year on year on its own merits with any future capital uplift being merely the icing on the cake and not the actual single investment criteria.
I work with 2 people with BTL's, one has 10-15+ properties and knows what he is doing. The other put down minimum cash deposit and doesnt know their yield. maybe the latter person will be lucky?
Gassing Station | Finance | Top of Page | What's New | My Stuff